Admission of SLP against Jurisdictional HC’s Ruling doesn’t curtail its binding nature: Mumbai ITAT

Case Details: Luxora Infrastructure (P.) Ltd. v. DCIT - [2022] 144 taxmann.com 93 (Mumbai-Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President & Pavan Kumar Gadale, Judicial Member
  • K.P. Dewani for the Appellant.
  • Shailja Rai for the Respondent.

Facts of the Case

Assessee-company was engaged in the business of construction and development of townships. Due to search operations carried out on the assessee and its associated group, assessee was called upon to file a fresh return under section 153A.

During the assessment, Assessing Officer (AO) made additions under section 68 with respect to the amount received from two entities. The assessee carried the matter in appeal before the CIT(A) but without success. The matter was reached before the Mumbai Tribunal.

The assessee contended before the Tribunal that the issue under appeal was squarely covered by the judgement of the Hon’ble jurisdictional High Court, in favour of the assessee. However, AO didn’t consider it by stating that said ruling is in appeal before the Hon’ble Apex court.

ITAT Held

The Mumbai Tribunal held that the decision of a High Court is binding only in the state of jurisdiction and not for a non-jurisdictional state. Although, it can have a persuasive effect.

The Tribunal clarified that the mere pendency of the appeal against the binding jurisdictional judgement to a higher judicial forum does not curtail, dilute or narrow down its binding nature. Also, unless such judicial precedent is reversed or upturned by a higher form, it is binding upon the lower judicial forums.

Thus, the plea of the assessee was accepted and additions made under section 68 were to be deleted following the judgement of the Hon’ble jurisdictional High Court.